2023 (9) TMI 357 - AT - Service Tax

Bank accounts frozen without justification, hindering business operations. Appeal successful.

M/s. Hotel Yashica Palace Versus Principal Commissioner of Central Excise & C.G. ST., Ujjain

The appellant appealed against the freezing of bank accounts following the rejection of a request to unfreeze them. The appellant had already deposited a ... Seeking de-freezing of bank accounts of petitioner - outstanding payment on the part of the appellant - HELD THAT:- The amount as was confirmed to be recovered from the appellant vide the Order-in-Original No.20 dated 29.03.2022 has already been objected as the appeal has been filed against the said order and the same is pending consideration. The other Order- in-Original No. 02 dated 07.09.2022 is not in dispute here. The copy of challan as placed on record reveals that most of the part of the amount in question/under sub judication stands already deposited by the appellant. The bank statements reveal that sufficient balance is lying in both of his accounts to meet the situation in case the appeal against the Order-in-Original stands decided against the appellant. The business of the appellant needs money circulation. In these circumstances, there are no reason nor department could produce anything on record to justify the freezing of the appellant’s accounts. It is also observed that both the accounts of the appellant have admittedly been frozen. The difficulty as impressed upon on behalf of the appellant in running his business for want of funds cannot be ruled out - Department has not brought on record any such fact which may reflect that appellant has other means to sustain his business. In the light of the discussion above there appears no justification for ordering freezing of the accounts. The order dated 25.05.2023 declining the request of the appellant to defreeze the accounts is hereby set aside. Appeal stands allowed. Issues involved:The appeal against the order rejecting the request to unfreeze the bank accounts.Summary:Issue 1: Confirmation of demands and freezing of bank accountsThe appellant appealed against two Orders-in-Original confirming demands of Rs.77,471/- and Rs.11,81,952/-. While the demand of Rs.77,471/- was deposited, the appeal against the demand of Rs.11,81,952/- was pending. The department froze the appellant's bank accounts after issuing a recovery notice for the latter amount. The appellant requested to defreeze the accounts, which was rejected. The counsel argued that most of the amount in question had already been deposited, and the frozen accounts had sufficient balance to meet any obligations. It was contended that freezing the accounts hindered the appellant's business operations due to lack of funds, and no justification was provided by the department for the freezing.Issue 2: Justification for freezing accountsUpon hearing both parties, it was observed that the appeal against the Order-in-Original confirming the larger demand was pending, and a significant portion of the amount had already been deposited. The appellant's business required financial transactions, and freezing the accounts impeded its operations. The department failed to demonstrate any alternative means for the appellant to sustain the business without access to the frozen funds. Consequently, the order declining the request to defreeze the accounts was set aside, and the appeal was allowed.This summary encapsulates the key details and reasoning behind the judgment without disclosing any sensitive information.